What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-03-08 compared with 2020-03-13 · 416 added, 340 removed, 396 unchanged (66% of the section changed)

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and serve unmet needs in the marketplace through our subsidiaries and deconsolidated companies.

We own one of the nation’s

leading ophthalmology pharmaceutical businesses, ImprimisRx.

In addition to wholly owning ImprimisRx, we also have equity positions

in Eton Pharmaceuticals, Inc.

(“Eton”), Surface Pharmaceuticals, Inc.

(“Surface”), Melt Pharmaceuticals,

(“Melt”), all companies that began as subsidiaries of Harrow.

More recently, we founded drug development subsidiaries

Mayfield Pharmaceuticals, Inc.

(“Mayfield”), Radley Pharmaceuticals, Inc.

(“Radley”), and Stowe Pharmaceuticals,

(“Stowe”).

During 2020, we intend to launch a new business and subsidiary called Visionology.

We also own royalty

rights in various drug candidates being developed by Surface, Melt, Radley and Mayfield.

We intend to continue to create and

hold equity and royalty rights in new businesses that commercialize drug candidates that are internally developed or otherwise

acquired or licensed from third parties.

is our ophthalmology focused pharmaceutical compounding business.

We own and operate one of the

nation’s leading ophthalmic pharmaceutical businesses, ImprimisRx.

In addition to wholly owning ImprimisRx, we also have

non-controlling equity positions in Eton Pharmaceuticals, Inc.

(“Eton”), Surface Ophthalmics, Inc.

and Melt Pharmaceuticals, Inc.

(“Melt”), all companies that began as subsidiaries of Harrow.

We also recently launched

a new business called Visionology and are exploring opportunities to launch other subsidiaries.

We own royalty rights in various

drug candidates being developed by Surface and Melt.

We intend to continue to create and hold equity and royalty rights in new

businesses that commercialize drug candidates that are internally developed or otherwise acquired or licensed from third parties.

is our ophthalmic focused prescription pharmaceutical business.

We offer to over 9,000 physician customers and their patients

critical medicines to meet their needs that are unmet by commercially available drugs.

We make our formulations available at prices

that are, in most cases, lower than non-customized commercial drugs.

Our current ophthalmology formulary includes over twenty

compounded formulations, many of which are patented or patent-pending, and are customizable for the specific needs of a patient.

Some examples of our compounded medications are various combinations of drugs formulated into one bottle and numerous preservative

free formulations.

Depending on the formulation, the regulations of a specific state and ultimately the needs of the patient,

ImprimisRx products may be dispensed as patient-specific medications from our 503A pharmacy, or for in-office use, made according

to current good manufacturing practices (or cGMPs) or other U.S.

Food and Drug Administration (“FDA”) guidance documents,

in our FDA-registered NJOF outsourcing facility.

is expected to be an online eye health platform, trusted by both physicians and patients.

In addition to allowing physicians to

communicate with pharmacists, and patients to communicate with physicians, it will offer a variety of high quality, affordable,

chronic care ophthalmic pharmaceutical products using a state of the art proprietary IT platform.

We expect to launch a proof-of-concept

model for Visionology in the first half of 2020 within a certain region of the U.S., and if successful, expand the launch on a

nationwide basis later in 2020 and 2021.

medically necessary prescription drugs to meet their needs that are otherwise unmet by commercially available drugs.

formulations available at prices that are, in most cases, lower than non-customized commercial drugs.

Our current ophthalmic formulary

includes over twenty compounded formulations, many of which are patented or patent-pending, and are customizable for the specific

needs of a patient.

Some examples of our compounded medications are various combinations of drugs formulated into one bottle and

numerous preservative-free formulations.

Depending on the formulation, the regulations of a specific state, and ultimately the

needs of the patient, ImprimisRx products may be dispensed as patient-specific medications from our 503A pharmacy, or for in-office

use, made according to federal current good manufacturing practices (or cGMPs) or other FDA guidance documents, in our FDA-registered

New Jersey Outsourcing Facility (“NJOF”).

August 1, 2020, ImprimisRx entered into a Commercial Alliance Agreement (the “Dexycu Agreement”) with Eyepoint Pharmaceuticals,

(“Eyepoint”), pursuant to which Eyepoint granted ImprimisRx the non-exclusive right to co-promote DEXYCU ®

(dexamethasone intraocular suspension) 9% for the treatment of post-operative inflammation following ocular surgery in the

United States.

Pursuant to the Dexycu

Agreement , Eyepoint pays ImprimisRx a fee that is calculated based on the

quarterly sales of DEXCYU in excess of predefined volumes to specific customers of ImprimisRx

expect to acquire and/or develop additional FDA-approved ophthalmic drugs that allow us to leverage the commercial infrastructure

of ImprimisRx to promote, sell, and ultimately bring these products to market.

is a membership-based online eye health and medication platform.

Visionology leverages our experience in the ophthalmic pharmaceutical

business, our relationships with eyecare professionals across the United States, and our expertise in developing and deploying

telemedicine software.

We recently launched a proof-of-concept for Visionology in certain states in the southeast area of the

If successful, we expect Visionology will expand access to its service later in 2021.

Ophthalmology

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surgery market continues to experience significant growth.

According to a 2018 iData report, 3.7 million cataract surgeries were

performed in the U.S.

The National Eye Institute estimates that over 24 million Americans currently have cataracts and

that this number will grow to 38 million by 2030 and reach more than 50 million by 2050.

In addition to the 3.7 million cataract

surgeries performed annually in the U.S., the American Academy of Ophthalmology (AAO) estimates that over one-half of Americans

require some form of vision correction and 43 million of these individuals are candidates for refractive surgery.

Nearly 96 percent

of the refractive surgery procedures performed are LASIK (laser in situ keratomileusis) surgeries, an outpatient surgical procedure

used to treat nearsightedness, farsightedness, and astigmatism.

According to Statista, an estimated 600,000 LASIK procedures were

performed in the U.S.

According to Market Scope, approximately 4.2 million cataract surgeries

were performed in the U.S.

The National Eye Institute estimates that over 24 million Americans currently have cataracts

and that this number will grow to 38 million by 2030 and reach more than 50 million by 2050.

In addition, the American Academy

of Ophthalmology (AAO) estimates that over one-half of Americans require some form of vision correction and 43 million of these

individuals are candidates for refractive surgery.

Nearly 96 percent of the refractive surgery procedures performed are LASIK

(laser in situ keratomileusis) surgeries, an outpatient surgical procedure used to treat nearsightedness, farsightedness, and

According to Statista, an estimated 600,000 LASIK procedures were performed in the U.S.

to the Glaucoma Research Foundation, there are over 3 million Americans with glaucoma but only half are aware they have it.

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is a direct correlation between the number of glaucoma bottles and decreased adherence;

however the FDA has yet to approve a PGA

combination product despite combination products including a PGA (Xalacom ®

, DuoTrav ®

and Ganfort ®

however, the FDA has yet to approve a

PGA combination product despite combination products including a PGA (Xalacom ® , DuoTrav ® and Ganfort ® )

available outside of the U.S.

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from 2018, there are an estimated 1.8 billion people worldwide who suffer from presbyopia, with eye glasses (more commonly referred

to as, “readers”) being the most common treatment option.

to as “readers”) being the most common treatment option.

Based on our understanding, there are currently four eyedrops

currently undergoing clinical trials/development in the U.S.

aiming to be first to market topical eye drops to treat the symptoms

associated with presbyopia.

We believe most of these are designed to enhance depth of field via a “pinhole effect”

and in one case to reduce lens stiffening;

and some of these medications could be synergistic with each other or combined with

refractive surgery to enhance outcomes.

However, as of the date of this Annual Report, none of these drug candidates has received

market approval from the FDA.

undergoing clinical trials/development in the U.S.

aiming to be first to market topical eye drops to treat the symptoms associated

with presbyopia.

We believe most of these are designed to enhance depth of field via a “pinhole effect” and in one

case to reduce lens stiffening;

and some of these medications could be synergistic with each other or combined with refractive

surgery to enhance outcomes.

However, as of the date of this Annual Report, none of these drug candidates has received market

approval from the FDA.

Pharmaceutical

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(either as a finished form product or as a bulk drug ingredient), and excipients to create specialized pharmaceutical preparations.

Physicians and healthcare institutions use compounded drugs when commercially available drugs do not optimally treat a patient’s

In many cases, compounded drugs, such as ours, have wide market utility and may be clinically appropriate for large patient

Examples of compounded formulations include medications with alternative dosage strengths or unique dosage forms,

such as topical creams or gels, suspensions, or solutions with more tolerable drug delivery vehicles.

Physicians and healthcare institutions use compounded drugs when commercially available drugs do not optimally treat a patient’s

medical needs.

In many cases, compounded drugs, such as ours, have wide market utility and may be clinically appropriate for large

patient populations.

Examples of compounded formulations include medications with alternative dosage strengths or unique dosage

forms, such as topical creams or gels, suspensions, or solutions with more tolerable drug delivery vehicles.

all of our sales revenue is derived from making, selling and dispensing our compounded prescription drug formulations as cash

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formulary inclusion and pharmacy benefit manager payment clawbacks, we are able to simplify the prescription transaction process.

We believe the outcome of our business model is a simple transaction, involving a patient-in-need, a physician’s diagnosis,

a fair price and great service for a quality pharmaceutical product.

We sell our products through a network of employees and independent

contractors and we dispense our formulations in all 50 states, Puerto Rico and in selected markets outside the United States.

We believe the outcome of our business model is a simple and transparent transaction, involving a patient-in-need, a physician’s

diagnosis, a fair price and great service for a quality pharmaceutical product.

We sell our products through a network of employees

and independent contractors, and we dispense our formulations in all 50 states, Puerto Rico and in selected markets outside the

United States.

Compounding Facilities

Pharmaceutical

compounding businesses are governed by Sections 503A and 503B of the Federal Food Drug and Cosmetic Act (the “FDCA”).

Section 503A of the FDCA provides that a pharmacy is only permitted to compound a drug for an individually identified patient

based on a prescription for a patient, and is only permitted to distribute the drug interstate if the pharmacy is licensed to

do so in the states where it is compounded and where the medication is received.

based on a prescription for a patient and is only permitted to distribute the drug interstate if the pharmacy is licensed to do

so in the states where it is compounded and where the medication is received.

503B of the FDCA provides that a pharmacy engaged in preparing sterile compounded drug formulations may voluntarily elect to register

as an “outsourcing facility.”

Outsourcing facilities are permitted to compound large quantities of drugs without a

prescription and distribute them out of state with certain limitations such as the formulation appearing on the FDA’s drug

shortage list or the bulk drug substances contained in the formulations appearing on the FDA’s “clinical need”

as an “outsourcing facility.” Outsourcing facilities are permitted to compound large quantities of drugs without a

prescription and distribute them out of state with certain limitations such as the formulation appearing on the FDA’s drug

shortage list or the bulk drug substances contained in the formulations appearing on the FDA’s “clinical need”

Entities voluntarily registering with FDA as outsourcing facilities are subject to additional requirements that do not apply

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Our New Jersey operations are comprised of two separate entities

and facilities, one of which is registered with the FDA as an outsourcing facility (“NJOF”) under Section 503B of

The other New Jersey facility (“RxNJ”), is a licensed pharmacy operating under Section 503A of the FDCA.

All products that we sell, produce and dispense are made in the United States.

and facilities, one of which is registered with the FDA as an outsourcing facility under Section 503B of the FDCA.

The other New

Jersey facility (“RxNJ”) is a licensed pharmacy operating under Section 503A of the FDCA.

All products that we sell,

produce and dispense are made in the United States.

believe that, with our current compounding pharmacy facilities and licenses and FDA registration of NJOF, we have the infrastructure

to scale our business appropriately under the current regulatory landscape and meet the potential growth in demand we are targeting.

We plan to invest in one or more of our facilities to further their capacity and efficiencies.

We plan to invest in one or both of our facilities to further their capacity and efficiencies.

Also, we may seek to access greater

pharmacy and production related redundancy and markets through acquisitions, partnerships or other strategic transactions.

pharmacy, production related redundancy, and distribution through acquisitions, partnerships or other strategic transactions.

Pharmaceutical

Development Businesses

have ownership interests in Eton, Surface, Melt, Mayfield and Radley and hold royalty interests in certain of their drug candidates.

These companies are pursuing market approval for their drug candidates under the FDCA, including in some instances under the abbreviated

pathway described in Section 505(b)(2) which permits the submission of a new drug application (“NDA”) where at least

some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant

has not obtained a right of reference.

In 2018 and 2019, we formed and created subsidiaries named Radley, Mayfield, and Stowe,

which we intend to operate similar to Eton, Surface and Melt.

In addition, we intend to create additional subsidiaries that will

be focused on the development and FDA approval of certain proprietary drug formulations that we currently own, will in-license/acquire

and/or otherwise develop.

Consolidated Businesses

Pharmaceuticals, Inc.

is a consolidated subsidiary of Harrow that was formed in 2019, focused on the development of its proprietary ophthalmic drug

candidate STE-006.

STE-006 is a patented, new chemical entity, small molecule topical drug candidate intended to treat various

bacterial, fungal, and viral infections in the eye.

In initial preclinical models, STE-006 was shown to be significantly more

effective compared to current conventional therapies against numerous bacterial and viral pathogens, including strains of methicillin-resistant

staphylococcus aureus, or MRSA, and herpes simplex virus.

STE-006 has several patents covering matter of composition, methods

of production, methods of use and molecule, which are valid until 2038.

own 2,500,000 shares of Stowe common stock, and control 70% of the equity and voting interests issued and outstanding of Stowe

at December 31, 2019.

We recently agreed to terms with an experienced, ophthalmology focused life science executive to be the

CEO of Stowe which would be become effective following a deconsolidating transaction, which we are currently pursuing.

Pharmaceuticals, Inc.

a consolidated subsidiary of Harrow, is a development-stage pharmaceutical company focused on consequential products that address

the conspicuous unmet needs of patients.

Its development programs focus on using known molecules in dosage forms for new indications,

and by developing new chemical entities with known mechanisms of action.

Mayfield recently licensed worldwide rights to a first-in-class

antimicrobial drug candidate, called MAY-66, which is being studied to treat recurrent bacterial vaginosis.

In February 2019,

Mayfield acquired drug formulation assets and intellectual property, including three recently issued patents, for MAY-44, a drug

candidate for the treatment of dyspareunia, or pain experienced by women during sexual intercourse.

In addition to MAY-44, Mayfield

is also developing MAY-88 for patients suffering from interstitial cystitis, which it will acquire from Harrow at the closing

of a deconsolidating transaction.

own 2,500,000 shares of Mayfield common stock, and control 70% of the equity and voting interests issued and outstanding of Mayfield

at December 31, 2019.

We are currently pursuing a deconsolidating transaction for Mayfield.

Once deconsolidated, we expect Mayfield

to be run by an experienced life science executive, that we have recently contracted with.

Pharmaceuticals, Inc.

a consolidated subsidiary of Harrow, is a development-stage pharmaceutical company focused on the development of proprietary 505(b)(2)

drug candidates focused on rare diseases.

Radley currently has three drug programs in its pipeline.

During January 2020, and prior

to initiating significant development activities and costs related to these drug programs, we met with the FDA to establish and

understand the expected clinical and regulatory path to approval for Radley’s lead drug program.

Conceptually, the FDA agreed

with our clinical program design, and we are currently considering options related to the next steps of the drug candidates development.

We are also pursuing investigator-initiated studies for some of Radley’s drug candidates with two well-known healthcare

institutions based in the New York and Boston areas.

We believe this approach will allow us to better understand and weigh the

economic costs, clinical feasibility and potential benefits associated with pursuing development activities associated with these

drug programs.

Radley is also pursuing additional asset acquisition and licensing opportunities with a focus in oncology-related

have ownership interests in Eton, Surface and Melt and hold royalty interests in some of Surface’s and Melt’s drug

These companies are pursuing market approval for their drug candidates under the FDCA, including in some instances

under the abbreviated pathway described in Section 505(b)(2) which permits the submission of a new drug application (“NDA”)

where at least some of the information required for approval comes from studies not conducted by or for the applicant and for

which the applicant has not obtained a right of reference.

In 2018 and 2019, we formed and created subsidiaries named Radley Pharmaceuticals,

(“Radley”), Mayfield Pharmaceuticals, Inc.

(“Mayfield”) and Stowe Pharmaceuticals, Inc.

In addition, we may create additional subsidiaries that will be focused on the development and FDA approval of certain proprietary

drug formulations that we currently own, will in-license/acquire and/or otherwise develop.

We expect any new subsidiaries to be

focused on eye care.

De-Consolidated

Pharmaceuticals, Inc.

is a pharmaceutical company focused on developing and commercializing innovative products utilizing the FDA’s 505(b)(2)

regulatory pathway.

Its pipeline includes several products and drug candidates in various stages of development across a variety

of dosage forms.

Eton’s pipeline is focused on innovative 505(b)(2) products and obtaining FDA marketing approval for currently

marketed but unapproved drugs.

May 2017, Eton closed an offering of its Series A Preferred Stock and we lost our controlling interest in it.

In November 2018,

Eton completed an initial public offering of its common stock.

We own 3,500,000 shares of Eton common stock, which is less than

20% of the equity and voting interests issued and outstanding of Eton as of December 31, 2019.

Pharmaceuticals, Inc.

is a development-stage pharmaceutical company focused on development and commercialization of innovative therapeutics for ocular

surface diseases and is seeking FDA approval for the commercialization of its drug candidates through the Section 505(b)(2) regulatory

pathway under the FDCA.

In 2017 and amended in April 2018, Harrow entered into asset purchase and license agreements (the “Surface

License Agreements”) and transferred to Surface its current drug pipeline, which consists of three proprietary drug candidates.

Surface’s patent-pending topical eye drop drug candidates, SURF-100 and SURF-200, utilize a patented delivery vehicle known

as Klarity Drops (“Klarity”), that was invented by Harrow board member and Surface’s chairman of the board,

renowned ophthalmologist Dr.

Richard Lindstrom.

Klarity is designed to protect and rehabilitate the ocular surface pathology for

patients with dry eye disease, or DED.

the fourth quarter of 2019, Surface filed an Investigational New Drug Application (“IND”) for its drug program SURF-201.

SURF-201 is a novel steroid topical eye drop drug candidate for treating pain and inflammation post-ocular surgery.

Surface expects

to submit an IND for its lead drug candidate, SURF-100, during the first half of 2020, for treating signs and symptoms associated

with chronic dry eye disease.

We expect Surface to release certain clinical data related to these programs near the end of 2020

and beginning of 2021.

May and July 2018, Surface closed on an offering of its Series A Preferred Stock.

At that time, we lost our controlling interest

and deconsolidated Surface from our consolidated financial statements.

We own 3,500,000 shares of Surface which we estimate is

approximately 30% of the issued and outstanding equity and voting interests as of December 31, 2019.

Businesses (Noncontrolling Equity Interests)

Ophthalmics, Inc.

is a clinical-stage pharmaceutical company focused on development and commercialization of innovative therapeutics for ocular

surface diseases.

January 2021, Surface announced positive top-line results from a phase 2 trial of its drug candidate SURF-201, a 0.2% betamethasone,

preservative-free ophthalmic solution in the Klarity delivery vehicle for the treatment of post cataract surgery pain and inflammation.

According to the Surface results, SURF-201 was dosed twice daily, met its primary endpoints of absence of inflammation at both

Day 8 and Day 15 and was found to be safe and well-tolerated by the patient group.

In addition, a secondary endpoint showed almost

90% of patients given SURF-201 were pain free at Day 15.

SURF-201 marks the first ophthalmic therapeutic in the United States

to utilize betamethasone as well as being the first preservative-free unit dose therapy for the treatment of post-operative pain

and inflammation.

in January 2021, Surface announced the first patient dosed in a head-to-head phase 2 trial for its drug candidate SURF-100 (mycophenolate

sodium and betamethasone in Klarity vehicle) for the treatment of chronic dry eye disease.

The head-to-head study will compare

SURF-100 against leading on-market competitors lifitegrast ophthalmic solution 5% (marketed as Xiidra®) and cyclosporine ophthalmic

emulsion 0.05% (marketed as Restasis®).

February 2021, Surface announced the first patient dosed in a phase 2 trial for its drug candidate SURF-200 (betamethasone in

Klarity vehicle) for the treatment of episodic dry eye flares.

The dose ranging study for SURF-200 will be administered in two

different low concentration formulations of betamethasone in the Klarity vehicle.

The trial will enroll 120 to 140 patients with

a primary endpoint of Symptom Improvement of one unit based on the University of North Carolina Dry Eye Management Scale by the

2018, Surface closed on an offering of its Series A Preferred Stock.

At that time, we lost our controlling interest and deconsolidated

Surface from our consolidated financial statements.

We own 3,500,000 shares of Surface, which was approximately 30% of the equity

and voting interests as of December 31, 2020.

Harrow owns mid-single digit royalty rights on net sales of SURF-100, SURF-200 and

We expect Surface to complete another round of financing within the next twelve months.

Pharmaceuticals, Inc.

is a development-stage pharmaceutical company focused on the development and commercialization of proprietary non-intravenous,

sedation and anesthesia therapeutics for human medical procedures in hospital, outpatient, and in-office settings.

to seek regulatory approval through the FDA’s 505(b)(2) regulatory pathway for its proprietary technologies, where possible.

In December 2018, we entered into an Asset Purchase Agreement with Melt (the “Melt Asset Purchase Agreement”), and

Harrow assigned to Melt the underlying intellectual property for Melt’s current pipeline, including its lead drug candidate

The core intellectual property Melt owns is a patented series of combination non-opioid sedation drug formulations that

we estimate to have multitudinous applications.

Pursuant to the terms of the Melt Asset Purchase Agreement, Melt is required to

make royalty payments to the Company equal to five percent (5%) of net sales of MELT-100, while any patent rights remain outstanding,

subject to other conditions.

is a clinical-stage pharmaceutical company focused on the development and commercialization of proprietary non-intravenous, sedation

and anesthesia therapeutics for human medical procedures in hospital, outpatient, and in-office settings.

Melt intends to seek

regulatory approval for its proprietary technologies, where possible.

In December 2018, we entered into an Asset Purchase Agreement

with Melt (the “Melt Asset Purchase Agreement”), and Harrow assigned to Melt the underlying intellectual property

for Melt’s current pipeline, including its lead drug candidate MELT-100.

The core intellectual property Melt owns is a patented

series of combination non-opioid sedation drug formulations that we estimate to have multitudinous applications.

is a novel, sublingually delivered, non-IV, opioid-free drug candidate being developed for procedural sedation.

Melt is expecting

to file an IND and begin its clinical program for MELT-100 in the summer of 2020, and if successful, begin enrollment for its

Phase 3 studies for MELT-100 during 2021.

January 2019, Melt closed on an offering of its Series A Preferred Stock.

Melt filed an

investigational new drug application (“IND”) with the FDA in June 2020 and began its clinical program for MELT-100.

In February 2021, Melt announced data from, and the successful completion of, its phase 1 study.

Melt expects to begin its phase

2 study for MELT-100 in the second half of 2021.

January 2019, Melt closed an offering of its Series A Preferred Stock.

At that time, we lost our controlling interest and deconsolidated

Melt from our consolidated financial statements.

We own 3,500,000 shares of Melt which we estimate is approximately 44% of the

issued and outstanding equity and voting interests as of December 31, 2019.

We own 3,500,000 shares of Melt common stock, which was approximately 44% of

the equity and voting interests issued and outstanding as of December 31, 2020.

We expect Melt to complete another round of financing

within the next twelve months.

Pursuant to the terms of the Melt Asset Purchase Agreement, Melt is required to make mid-single

digit royalty payments to the Company on net sales of MELT-100, while any patent rights remain outstanding, subject to other conditions.

Melt can require the Company to cease compounding like products at the time of FDA approval of MELT-100.

If approved, we do not

expect a cessation of compounding like products to have a material impact on our operations and financial performance.

Pharmaceuticals, Inc.

is a commercial-stage pharmaceutical company focused on developing and commercializing innovative drug products.

includes several products and drug candidates in various stages of development across a variety of dosage forms.

Eton closed an offering of its Series A Preferred Stock.

At that time, we gave up our controlling interest and deconsolidated

Eton from our consolidated financial statements.

In November 2019, Eton completed an initial public offering of its common stock.

We own 3,500,000 shares of Eton common stock, which was less than 20% of the equity and voting interests issued and outstanding

as of December 31, 2020.

Businesses (Controlling Equity Interests)

Stowe and Radley are consolidated subsidiaries of Harrow.

Mayfield is a development-stage pharmaceutical company focused on developing

urology related drug candidates.

Stowe is focused on the development of proprietary ophthalmic drug candidates.

Radley is a development-stage

pharmaceutical company that has been focused on the development of proprietary drug candidates focused on rare diseases.

Recently, we discontinued nearly all of the activities related to Mayfield, Stowe and

Radley, and may not resume those activities in the near term.

control over 50% of the equity and voting interests issued and outstanding of Mayfield, Stowe and Radley as of the date of this

Annual Report.

505(b)(2) New Drug Applications

an alternate path for FDA approval of new indications or new formulations of previously-approved products, a company may file

a Section 505(b)(2) NDA instead of a “stand-alone”

or “full”

a Section 505(b)(2) NDA instead of a “stand-alone” or “full” NDA.

Section 505(b)(2) of the FDCA was enacted

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Hatch-Waxman Amendments permit the applicant to rely upon certain published nonclinical or clinical studies conducted for an approved

product or the FDA’s conclusions from prior review of such studies.

The FDA may require companies to perform additional

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data related to the manufacturing and quality of the new product must be included in an NDA submitted under Section 505(b)(2).

the extent that the Section 505(b)(2) applicant is relying on the FDA’s conclusions regarding studies conducted for an already

approved product, the applicant is required to certify to the FDA concerning any patents listed for the approved product in the

FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, or Orange Book.

Specifically, the applicant must

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Our sales and marketing efforts are

currently organized into two teams, the larger of which focuses on our ophthalmology pharmaceutical compounding business and the

other on our non-ophthalmology pharmaceutical compounding business.

Our sales and marketing activities consist primarily of efforts

to educate doctors, ambulatory surgery centers, healthcare systems, hospitals and other users throughout the U.S.

currently organized into two teams, the larger of which focuses on our ophthalmology pharmaceutical business and the other on

our non-ophthalmology pharmaceutical compounding business.

Our sales and marketing activities consist primarily of efforts to

educate doctors, ambulatory surgery centers, healthcare systems, hospitals and other users throughout the U.S.

about our compounded

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on our ability to build and grow a qualified and adequate internal sales function.

2017 through 2019, we entered various sales and marketing agreements, with certain organizations to provide exclusive sales and

marketing representation services to ImprimisRx in select geographies in the U.S., in connection with our ophthalmic compounded

formulations.

Under the terms of the sales and marketing agreements, we are required to make commission payments to equal to 10%

to 14% of net sales for products above and beyond the initial existing sales amounts.

expect to acquire and/or develop additional FDA-approved ophthalmic drugs that allow us to leverage the commercial infrastructure

of ImprimisRx to promote, sell, and ultimately bring these products to market.

As we execute this strategy, we will likely expand

our sales and marketing team, expertise and expenses.

This would include the addition of market access expertise and team members,

where roles include discussions with payors regarding the costs and benefits of our products for their members, assisting with

the addition of our products to the medical policy of payors, and providing the market with assistance regarding reimbursement

have entered into various sales and marketing agreements with certain organizations to provide exclusive sales and marketing representation

services to ImprimisRx in select geographies in the U.S., in connection with our pharmaceutical products and compounded formulations.

Under the terms of the sales and marketing agreements, we are required to make commission payments, generally equal to 10% to

14% of net sales for products above and beyond the initial existing sales amounts.

In addition, we are required to make periodic

milestone payments to certain organizations in shares of the our restricted common stock if net sales in the assigned territory

reach certain future levels by the end of their terms, as applicable.

We believe these sales and marketing agreements will accelerate

launches of our new ophthalmology programs and limit our initial capital requirements commonly associated with new product launches

and increased sizes of sales forces.

milestone payments to certain organizations in shares of our restricted common stock if net sales in the assigned territory reach

certain future levels by the end of their terms, as applicable.

We believe these sales and marketing agreements will continue

to accelerate launches of our new ophthalmology programs and limit our initial capital requirements commonly associated with new

product launches and increased sizes of sales forces.

pharmaceutical and pharmacy industries are highly competitive.

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Options and Pricing Optimization

proprietary ophthalmic pharmaceutical compounded formulations are primarily available on a cash-pay basis.

However, we work with

third-party insurers, pharmacy benefit managers and buying groups to offer patient-specific customizable compounded formulations

at accessible prices.

We may devote time and other resources to seek reimbursement and patient pay opportunities for these and

other compounded formulations and we have hired pharmacy billers to process certain existing reimbursement opportunities for certain

formulations.

However, we may be unsuccessful in achieving these goals, as many third-party payors have imposed significant restrictions

on reimbursement for compounded formulations in recent years.

Moreover, third-party payors, including the Centers for Medicare

& Medicaid Services (“CMS”), are increasingly attempting to contain health care costs by limiting coverage and

the level of reimbursement for new drugs and by refusing, in some cases, to provide coverage for uses of approved products for

disease indications for which the FDA has not granted formal labeling approval.

Further, the Patient Protection and Affordable

Care Act and the Health Care and Education Reconciliation Act of 2012 (collectively, the “Health Care Reform Law”)

may have a considerable impact on the existing U.S.

system for the delivery and financing of health care and could conceivably

have a material effect on our business.

As a result, reimbursement from Medicare, Medicaid and other third-party payors may never

be available for any of our products or, if available, may not be sufficient to allow us to sell the products on a competitive

basis and at desirable price points.

If government and other third-party payors do not provide adequate coverage and reimbursement

levels for our formulations, the market acceptance for our formulations may be limited.

proprietary ophthalmic compounded formulations are currently primarily available on a cash-pay basis.

However, we work with third-party

insurers, pharmacy benefit managers and buying groups to offer patient-specific customizable compounded formulations at accessible

We may devote time and other resources to seek reimbursement and patient pay opportunities for these and other compounded

formulations, and we have hired pharmacy billers to process certain existing reimbursement opportunities for certain formulations.

However, we may be unsuccessful in achieving these goals, as many third-party payors have imposed significant restrictions on

reimbursement for compounded formulations in recent years.

Moreover, third-party payors, including Medicare, are increasingly

attempting to contain health care costs by limiting coverage and the level of reimbursement for new drugs and by refusing, in

some cases, to provide coverage for uses of approved products for disease indications for which the FDA has not granted labeling

Further, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation

Act of 2010 (collectively, the “Health Care Reform Law”), may have a considerable impact on the existing U.S.

for the delivery and financing of health care and could conceivably have a material effect on our business.

As a result, reimbursement

from Medicare, Medicaid and other third-party payors may never be available for any of our products or, if available, may not

be sufficient to allow us to sell the products on a competitive basis and at desirable price points.

We are communicating with

government and third-payor payors in order to make our formulations available to more patients and at optimized pricing levels.

However, if government and other third-party payors do not provide adequate coverage and reimbursement levels for our formulations,

the market acceptance and opportunity for our formulations may be limited.

Additionally,

we are making efforts to receive reimbursement and/or optimize the pricing for some of our currently available pharmaceutical

we have previously made efforts to receive reimbursement and/or optimize the pricing for some of our currently available pharmaceutical

compounded formulations, including applying for transitional pass-through reimbursement status for one of our formulations.

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that meet well-established criteria specified by federal regulations governing CMS spending.

We expect to hear from CMS before

July 1, 2020, if we will be granted pass-through status for these formulations.

Any efforts to attain optimized pricing or reimbursement

for these or any of our other proprietary formulations could fail, which could make our products less attractive or unavailable

to some patients or could reduce our margins.

In September 2020, we were informed

by CMS that our application for pass-through payment was denied for one of our formulations.

Any future efforts to attain optimized

pricing or reimbursement of our other proprietary compounded formulations could fail, which could make our products less attractive

or unavailable to some patients or could reduce our margins.

success and ability to compete depends upon our ability to protect our intellectual property.

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In addition, as

of February 29, 2020, we owned and/or licensed fourteen U.S.

issued patents, five international issued patents, and 30 U.S.

applications, including 26 utility (including continuation, continuation-in-part and divisional) and three provisional patent

applications, and we owned seven international patent applications filed under the Patent Cooperation Treaty and 42 foreign patent

applications.

We expect to file additional patent applications in the U.S.

and pursue patent protection for certain of our formulations

in other important international jurisdictions in the future.

of February 29, 2020, we had, on a worldwide basis, 186 issued trademarks, pending trademark and copyright applications, or registered

Imprimis ®

, ImprimisRx ®

, Harrow Health tm ,

Dropless ®

, LessDrops ®

, Dropless Cataract Surgery ®

, Dropless Cataract Therapy ®

Dropless Therapy ®

, MKO Melt™, and Simple Drops tm.

We may choose to pursue trademark protection

in other jurisdictions for any one or more of these or other marks in the future.

of March 1, 2021, we owned and/or licensed 105 total issued and pending patent applications, which include 16 U.S.

issued patents,

10 international issued patents, and 79 U.S.

and foreign/international patent pending applications.

We expect to file additional

patent applications in the U.S.

and pursue patent protection for certain of our formulations in other important international

jurisdictions in the future.

of March 1, 2021, we had, on a worldwide basis, 275 issued trademarks, pending trademark and copyright applications, or

registered copyright and/or trademarks including, but not limited to:

Imprimis ® , ImprimisRx ® , Harrow

Health ® , Dropless ® , LessDrops ® , Dropless Cataract Surgery ® , Dropless

Cataract Therapy ® , Dropless Therapy ® , MKO Melt ® , and Simple Drops ® .

We may choose to pursue trademark protection in other jurisdictions for any one or more of these or other marks in the future.

also rely on unpatented trade secrets and know-how and continuing technological innovation in order to develop our formulations,

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state and local licensure and registration requirements concerning the operation of pharmacies and the practice of pharmacy;

Health Insurance Portability and Accountability Act (“HIPAA”);

the Health Care Reform Law;

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Failure to comply with the state pharmacy regulations of a particular state could result in a pharmacy being prohibited from operating

in that state, financial penalties and/or becoming subject to additional oversight from that state’s board of pharmacy.

In addition, many states are considering imposing, or have already begun to impose, more stringent requirements on compounding

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law limits compounding pharmacies from engaging in the practice of anticipatory compounding, which involves preparing compounded

medications before the actual receipt of a prescription or practitioner’s order, unless the compounding pharmacy has a history

of filling certain prescriptions for a customer.

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operations, we believe we comply with them.

under federal law, Section 503A of the FDCA seeks to limit the amount of compounded products that a pharmacy can distribute interstate.

The interpretation and enforcement of this provision is dependent on the FDA entering into a standard Memorandum of Understanding

(“MOU”) with each state setting forth limits on shipments of interstate compounding.

In January of 2018, the FDA released

a “2018 Compounding Policy Priorities Plan”

(the “2018 Compounding Plan”) which provided an overview of

the key priorities the FDA plans to focus on in 2018 in connection with compounding regulations.

One of the priorities outlined

in the 2018 Compounding Plan addressed the FDA’s plan to release a revised MOU (the “Revised MOU”).

to the statements in the 2018 Compounding Plan, the Revised MOU would consider amounts shipped interstate by a compounder to be

inordinate amounts if the “number of prescriptions of compounded drugs distributed interstate during any calendar month

is greater than 50 percent.”

Importantly, instead of that number serving as a “hard limit, for state action,”

the 50% target would trigger certain additional reporting requirements.

The Revised MOU will also provide states more time to

report to the FDA, and flexibility on identifying when amounts are inordinate, considering the size and scope of compounding operations.

Until the Revised MOU is issued and presented to states to consider, the extent of interstate distribution restrictions imposed

by Section 503A is unknown.

However, the FDA has continued to state its position that it does not intend to enforce the 5% out

of state distribution limit set forth in the law for compounders until a final MOU is made available for a state’s signature.

The FDA has proposed a 180 day grace period for states to agree to the final MOU after the final version is presented, which to

date has not occurred, before it would begin to enforce the 5% rule.

If the final Revised MOU contains a 50% limit on interstate

distribution, dependent on the additional reporting requirements to be outlined in the Revised MOU, our pharmacy operations could

be materially limited.

under federal law, Section 503A of the FDCA previously had language that implied a limitation of the amount of compounded products

that a pharmacy can distribute interstate.

The interpretation and enforcement of this provision is dependent on the FDA entering

into a standard Memorandum of Understanding (“MOU”) with each state setting forth limits on shipments of interstate

In January of 2019, the FDA released a “2018 Compounding Policy Priorities Plan” (the “2018 Compounding

Plan”) which provided an overview of the key priorities the FDA planned to focus on in 2018 in connection with compounding

One of the priorities outlined in the 2018 Compounding Plan addressed the FDA’s plan to release a revised MOU

(the “Revised MOU”).

Pursuant to the statements in the 2018 Compounding Plan, the Revised MOU would consider amounts

shipped interstate by a compounder to be inordinate amounts if the “number of prescriptions of compounded drugs distributed

interstate during any calendar month is greater than 50 percent.” Importantly, instead of that number serving as a “hard

limit, for state action,” the 50% target would trigger certain additional reporting requirements.

On October 27, 2020, the

FDA announced availability of a final MOU, Addressing Certain Distributions of Compounded Human Drug Products Between the State

Board of Pharmacy or Other Appropriate State Agency and the Food and Drug Administration (the “Final MOU”).

MOU describes the responsibilities of a state board of pharmacy, or other appropriate state agency that chooses to sign the Final

MOU, in investigating and responding to complaints related to drug products compounded in such state and distributed outside such

state and in addressing the interstate distribution of inordinate amounts of compounded human drug products.

Additionally, as

part of the Final MOU, FDA refined the definition of “inordinate amount,” a threshold for certain information identification

and sharing which does not place a limit on the distribution of compounded human drug products interstate by a pharmacy located

in a state that has entered into the Final MOU.

Section 503A of the FDCA sets a five percent limit on compounded drugs distributed

outside the state by a pharmacist, pharmacy or physician located in a state that has not entered into the Final MOU.

365 days to sign the Final MOU, before the FDA intends to enforce the five percent limit described in Section 503A of the FDCA

in states that have not signed the Final MOU.

Our pharmacy is based in the state of New Jersey, and based on feedback we have

received from the state board of pharmacy in New Jersey, we believe the state board of pharmacy in New Jersey will sign the MOU

and as a result, our operations will not be materially affected by the Final MOU.

In the event New Jersey does not sign the Final

MOU, our pharmacy that operates under Section 503A may be materially affected and we will transition as many prescription orders

as possible to our outsourcing facility, which is not subject to the Final MOU.

provisions of the FDCA govern the preparation, handling, storage, marketing and distribution of pharmaceutical products.

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compounding for distribution, which generally permit anticipatory compounding only based on historical prescription volumes.

DQSA also contained new Section 503B of the FDCA, which established an outsourcing facility as a new form of entity that is

permitted to compound larger quantities of drug formulations without a prescription, thus permitting the practice of

anticipatory compounding, and distributing them out of state without limitation, if the drug formulations appear on the

FDA’s drug shortage list or the bulk drug substances contained in the formulations appear on a “clinical

list to be established by the FDA.

In January 2017, the FDA issued an Interim Policy on Compounding Using Bulk

Drug Substances Under Section 503B of the FFDCA (“Interim Policy”) that informs stakeholders about how the

FDA intends to exercise its enforcement discretion for compounding with those substances on a “Category 1 list”

while the agency compiles and evaluates its clinical needs list, as well as in March 2019 the FDA issued guidance for

industry Evaluation of Bulk Substances Nominated for Use in Compounding Under Section 503B of the Federal Food, Drug and

Cosmetic Act , which further describes FDA’s policy for evaluating bulk drug substances nominated for use in

compounding by outsourcing facilities.

Entities voluntarily registering as outsourcing facilities are subject to cGMP

requirements and regular FDA inspection, among other requirements.

As described above, our current pharmacy operations in NJ

are governed by Section 503A of the FDCA, and our NJ based outsourcing facility is governed by Section 503B of the

DQSA also contained new Section 503B of the FDCA, which established an outsourcing facility as a new form of entity that is permitted

to compound larger quantities of drug formulations without a prescription, thus permitting the practice of anticipatory compounding,

and distributing them out of state without limitation, if the drug formulations appear on the FDA’s drug shortage list or

the bulk drug substances contained in the formulations appear on a “clinical need” list to be established by the FDA.

In January 2017, the FDA issued an Interim Policy on Compounding Using Bulk Drug Substances Under Section 503B of the FFDCA

(“Interim Policy”) that informs stakeholders about how the FDA intends to exercise its enforcement discretion

for compounding with those substances on a “Category 1 list” while the agency compiles and evaluates its clinical

needs list, as well as in March 2019 the FDA issued guidance for industry Evaluation of Bulk Substances Nominated for Use in

Compounding Under Section 503B of the Federal Food, Drug and Cosmetic Act , which further describes the FDA’s policy

for evaluating bulk drug substances nominated for use in compounding by outsourcing facilities.

Entities voluntarily registering

as outsourcing facilities are subject to cGMP requirements and regular FDA inspection, among other requirements.

above, our current pharmacy operations in NJ are governed by Section 503A of the FDCA, and our NJ based outsourcing facility is

governed by Section 503B of the FDCA.

July 30, 2020, the FDA issued a notice for comments related to certain bulk drug substances to be removed from the 503B Bulk’s

List (or Category 1 List).

Included in this notice for comment were certain bulk drug substances which we currently use in some

of our compounded products.

In the event one or more of these bulk substances are ultimately removed from the Category 1 List,

we intend to utilize commercially available versions of these substances or similar active pharmaceutical ingredients as replacements

of the bulk powders contained in our sterile products.

In addition, nothing in the FDA’s notice affects the dispensing of

bulk powder-containing products from our 503A pharmacy.

Nonetheless, if all or some of the bulk drug substances we use are removed

from the 503B Bulk’s List, this may result in a disruption in our operations, revenues and cash flows.

In addition, during

September 2020 through January 2021, NJOF was inspected by the FDA (the “2020 Inspection”) and certain observations

were made by FDA in a Form 483.

Five observations made during the 2020 Inspection were considered repeat observations from a 2017

FDA inspection of NJOF.

In addition, during the 2020 Inspection, the FDA noted that we were compounding drugs for which there

is no change that produces for an individual patient a clinical difference, as determined by a prescribing practitioner between

a compounded drug and the comparable approved drug.

We have responded to the FDA regarding all of their observations from the

2020 Inspection, including providing documentation from prescribing clinicians that indicate a clinical difference between our

compounded drugs and the comparable approved drugs, while also committing to amend our order process to collect “medical

necessity/clinical difference” information for each order of our compounded drugs on a go-forward basis.

two recent California federal court decisions, Allergan USA, Inc.

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to the state of California.

In the Prescribers Choice case, the Court determined that while the FDA’s interim policies

do not override the statutory obligations of the DQSA, the Court supported the FDA’s authority and flexibility as it determines

In the Prescribers Choice case, the Court determined that while the FDA’s interim policies

do not override the statutory obligations of the DQSA, the Court supported the FDA’s authority and flexibility as it determines

what clinical needs exist and finalizes the bulk drug substances list.

The Court would not hold a party liable under California’s

Sherman Food, Drug and Cosmetic Law (“Sherman Law”) for selling, delivering, or giving away any new drug that has

not been approved by the California Department of Health Services or FDA if that party has complied with the FDA’s Interim

The Court would not hold a party liable under California’s

Sherman Food, Drug and Cosmetic Law (“Sherman Law”) for selling, delivering, or giving away any new drug that has

not been approved by the California Department of Health Services or FDA if that party has complied with the FDA’s Interim

In other words, it is not unlawful in California to utilize bulk drugs appearing on the Category 1 list while the FDA

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In the Imprimis Pharmaceuticals case, the Court made clear that its rulings related

to violations of California’s Unfair Competition Law (“UCL”) (Cal.

Code §17200) were limited

to violations of California’s Unfair Competition Law (“UCL”) (Cal.

Code §17200) were limited

in geographical scope to drugs prepared in, dispensed from within or shipped to the State of California.

With respect to 503A

facilities, the Court followed FDA’s guidance allowing compounding pharmacies to ship more than 5% of its medications out

of state while finalizing the MOUs.

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With respect to the statutory guidance related to compounding in response

to valid prescription orders, the Court added a requirement that the valid prescription order must contain language that “an

FDA-approved drug is not medically appropriate.”

The practical effect of these two rulings is that 503A and 503B facilities

to valid prescription orders, the Court added a requirement that the valid prescription order must contain language that “an

FDA-approved drug is not medically appropriate.” The practical effect of these two rulings is that 503A and 503B facilities

operating within or shipping drugs into the State of California now have clear guidance as to what is, and is not, lawful behavior

with respect the California’s UCL and Sherman Law.

Confidentiality,

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Other countries also have, or are developing, laws governing the collection, use and transmission

of personal information, such as the General Data Protection Regulation (“GDPR”) in the European Union (the “EU”)

that became effective in May 2018 and the Personal Information Protection and Electronic Documents Act that became effective in

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existing reimbursement opportunities for certain formulations.

In February 2020, we applied to CMS for transitional pass-through

payment status for one of our compounded formulations, and may apply for transitional-pass through payment status of an additional

compounded formulation later this year, however, we may be unsuccessful in achieving these goals, as many third-party payors have

imposed significant restrictions on reimbursement for compounded formulations in recent years.

Moreover, third-party payors, including

Medicare, are increasingly attempting to contain health care costs by limiting coverage and the level of reimbursement for new

drugs and by refusing, in some cases, to provide coverage for uses of approved products for disease indications for which the

FDA has not granted labeling approval.

Moreover, third-party payors, including Medicare, are increasingly

attempting to contain health care costs by limiting coverage and the level of reimbursement for new drugs and by refusing, in

some cases, to provide coverage for uses of approved products for disease indications for which the FDA has not granted labeling

Further, the Health Care Reform Law may have a considerable impact on the existing U.S.

system for the delivery and financing of health care and could conceivably have a material effect on our business.

reimbursement from Medicare, Medicaid and other third-party payors may never be available for any of our products or, if available,

may not be sufficient to allow us to sell the products on a competitive basis and at desirable price points.

system for the delivery and

financing of health care and could conceivably have a material effect on our business.

As a result, reimbursement from Medicare,

Medicaid and other third-party payors may never be available for any of our products or, if available, may not be sufficient to

allow us to sell the products on a competitive basis and at desirable price points.

the extent we obtain third-party reimbursement for our compounded formulations, we may become subject to Medicare, Medicaid and

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discussed in other sections of this report, we are and may continue to, alone or with project partners, pursue FDA approval to

market and sell one or more of our formulations through the FDA’s NDA process.

To the extent that the Section 505(b)(2)

applicant is relying on the FDA’s conclusions regarding studies conducted for an already approved product, the applicant

is required to certify to the FDA concerning any patents listed for the approved product in the FDA’s Orange Book publication.

applicant is relying on the FDA’s conclusions regarding studies conducted for an already approved product, the applicant

is required to certify to the FDA concerning any patents listed for the approved product in the FDA’s Orange Book publication.

As a condition of approval, the FDA or other regulatory authorities may require further studies, including Phase 4 post-marketing

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and withdraw approvals, any one or more of which could have a material adverse effect on our business.

novel strain of coronavirus was first identified in Wuhan, China in December 2020.

The disease caused by it, COVID-19, was declared

a global pandemic by the World Health Organization in March 2020.

On March 18, 2020, CMS released guidance for U.S.

providers to limit all elective medical procedures in order to conserve personal protective equipment and limit exposure to COVID-19

during the pendency of the pandemic.

In addition to limiting elective medical procedures, many hospitals and other healthcare

providers have strictly limited access to their facilities during the pandemic.

The COVID-19 pandemic has negatively impacted

the global economy, disrupted global supply chains and healthcare delivery, led to social distancing recommendation, and created

significant volatility in financial markets.

response to the pandemic and business disruptions, first and foremost, we have prioritized the health and safety of our employees,

customers, suppliers and others with whom we partner in our business activities.

We have instructed employees to work from home

when possible and to maintain recommended physical distancing when working in our facilities.

We also have eliminated non-essential

in-person contact with customers, suppliers and other third parties.

of the Company’s customers use its drugs in procedures that were impacted by the CMS guidance to limit elective procedures.

In addition, the Company and our business partners need access to healthcare providers and facilities to conduct clinical trials

and other activities required to achieve regulatory clearance of products under development.

We are carefully monitoring rapidly

evolving changes in healthcare delivery systems and may adjust our operating and product development plans accordingly.

the unprecedented and dynamic nature of the COVID-19 pandemic, we cannot reasonably estimate the impacts it may have on our financial

condition, results of operations or cash flows in the future.

However, the reduction in elective procedures in response to CMS

guidance has had a material adverse impact, on our revenues, profitability and cash flows, in particular during the second quarter

The extent and duration of future impact will depend upon the extent of procedure postponements, the duration of the

pandemic and any resurgences of it, especially within certain geographies and states that have retained restrictive measures and

social distancing policies.

In May 2020 and the following months, some U.S.

states and geographies began easing restrictions associated

with the COVID-19 pandemic including those restrictions related to elective procedures, as restrictions were lifted in those areas

there was a correlation with an increase in our revenues.

Despite the recent resurgence of the COVID-19 pandemic in certain parts

of the U.S., we are hopeful that the general trend of easing of restrictions will continue and sales of our products will return

to historical norms and historical growth trends, as other states and governmental authorities continue to ease restrictions associated

with elective procedures and the COVID-19 pandemic.

and Development Expenses

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Our reportable segments consist of (i) our commercial stage

pharmaceutical compounding business (Pharmaceutical Compounding), generally including the operations of our ImprimisRx business;

and (ii) our start-up operations associated with pharmaceutical drug development business (Pharmaceutical Drug Development).

contribution for our segments represents net revenues less cost of sales, research and development, selling and marketing expenses,

and select general and administrative expenses.

pharmaceutical business (Pharmaceutical Compounding), generally including the operations of our ImprimisRx business;

our start-up operations associated with pharmaceutical drug development business (Pharmaceutical Drug Development).

Segment contribution

for our segments represents net revenues less cost of sales, research and development, selling and marketing expenses, and select

general and administrative expenses.

The Company does not evaluate the following items at the segment level:

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Note 18 to our consolidated financial statements included in this Annual Report for more information about our reportable segments.

of March 6, 2020, we employed 133 employees.

of March 1, 2021, we had 125 employees.

Our employees are engaged in pharmacy operations, sales, marketing, research, development,

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We hire independent contractor labor and

consultants on an as-needed basis.

consultants on an as-needed basis, our salesforce is comprised primarily of contract sales organizations and contract labor.

Acquisition and Retention

recognize that our employees largely contribute to our success.

To this end, we support business growth by seeking to attract

and retain best-in-class talent.

Our talent acquisition team uses internal and external resources to recruit highly skilled candidates

We believe that we continue to attract and retain superior talent as measured by our minimal turnover rate and a high

employee service tenure.

total rewards philosophy has been to create investment in our workforce by offering competitive compensation and benefits packages.

We provide employees with compensation packages that include base salary, annual incentive bonuses, and long-term equity awards.

We also offer comprehensive employee benefits, such as life, disability, and health insurance, health savings and flexible spending

accounts, paid time off, and a 401(k) plan.

It is our expressed intent to be an employer of choice in our industry by providing

market-competitive compensation and benefits packages.

Safety, and Wellness

health, safety, and wellness of our employees is a priority in which we have always invested and will continue to do so.

our employees and their families with access to a variety of innovative, flexible, and convenient health and wellness programs.

Program benefits are intended to provide protection and security, so employees can have peace of mind concerning events that may

require time away from work or that may impact their financial well-being.

investments and the prioritization of employee health, safety, and wellness took on particular significance in 2020 in light of

To protect and support our essential team members, we have implemented health and safety measures that included maximizing

personal workspaces, changing shift schedules, providing personal protective equipment (PPE), and instituting screening before

accessing buildings.

In response to local stay-at-home orders and in alignment with CDC recommendations, we have limited our employees

onsite in our office location based in San Diego, California.

To aid in containing the spread of COVID-19, we have implemented

remote-work options when appropriate and are limiting employee travel.

We will continue to seek programs to educate and assist

employees whenever possible.

Equity, and Inclusion

believe a diverse workforce is critical to our success.

Our mission is to value differences in races, ethnicities, religions,

nationalities, genders, ages, sexual orientations, as well as education, skill sets and experience.

We are focused on inclusive

hiring practices, fair and equitable treatment, organizational flexibility, and training and resources.

and Development

believe in encouraging employees in becoming lifelong learners by providing ongoing learning, training and leadership opportunities.

We provide our employees with a tuition reimbursement program, and in certain instances onsite training programs.

While we strive

to provide real-time recognition of employee performance, we have a formal annual review process not only to determine pay and

equity adjustments tied to individual contributions, but to identify areas where training and development may be needed.

were incorporated in Delaware in January 2006 as Bywater Resources, Inc.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business